If you’ve found yourself in a tough place and are considering filing for bankruptcy but have no idea what that may entail then you’ve come to the right place. This is a very basic list of things to consider before filing for bankruptcy.
It Takes Time
Filing for bankruptcy is not a one and done deal. It can take months or even years, depending on what chapter of bankruptcy you are filing for. Not only that but it will be mountains of paperwork that you will need to thoroughly sift through.
The paperwork that you’ll need to complete will be complicated and require scrupulous attention to every detail. One mistake could set you back or land you in a heap of trouble. If you are unsure how to fill out certain documents, you should seek legal advice.
If the thought of letting the world know all of your money matters, including the mistakes, makes you uncomfortable, you better get over that real fast. You will have to complete a bankruptcy schedule which is a document that lists all of your debts, assets, income, expenses, and financial transactions.
Not intimidated yet? You will also be required to go to a meeting of creditors. At this meeting, you’ll be asked invasive questions by both the bankruptcy trustee and your creditors. The meeting is open to the public so anyone can come and hear your monetary issues.
Filing for bankruptcy isn’t cheap. If you choose to hire an attorney to help you with all the messy paperwork that can cost you hundreds or even thousands of dollars. There are also significant fees tacked onto filing your paperwork even if you do it all yourself. If you’re lucky and broke enough you may be able to get your filing fees waived.
You will need to be completely honest and open about your financial situation during the bankruptcy process. According to The Balance, “It is the position of bankruptcy courts that only the honest debtor is entitled to a discharge of debt.” If you choose to lie during your case be aware that is considered a federal crime and you could be subject to investigation and punishment to the full extent of the law.
4 Important Terms
- Exempt Assets: These are things that cannot be taken to help pay your debts like your home or the vehicle you drive up to a certain price.
- Non-Exempt Assets: This would be anything your creditor can legally take to help pay off your debt. This might be a second car, a boat, or a lake house.
- Secured Debts: These debts are attached to a source like a boat, second home or car.
- Non-Secured Debts: These debts are not attached to anything physical so this would be a credit card loan or medical bill.
If you’ve read through this list and think that filing for bankruptcy still might be your best option then I would suggest doing some further research to see what chapter of bankruptcy your case would fall under. Depending on the chapter this could be something you’ll be working on for years to come. Be equipped with the proper information before you begin filing.